Page 83

• Verification of payments made (such as canceled checks) If any of the required information is missing or not clear and concise, the agreement may result in a transfer of property penalty. 2640.10.25 DETERMINING UNCOMPENSATED VALUE If inadequate consideration is received, the DFR must determine the uncompensated value. The uncompensated value is the difference between the fair market value, minus loans, mortgages, or other encumbrances, and the consideration received by the individual.92 When the transferred property was jointly owned, the uncompensated value is the difference between the individual's share of the fair market value and the consideration received by the individual. 2640.10.25.05 TRANSFERS INVOLVING LIFE ESTATES When an individual who owns real property transfers ownership of the property to another person and retains a life estate, the uncompensated value must be determined. The uncompensated value is the fair market value of the property, less the amount of loans, mortgages, or other encumbrance, minus the value of the life estate and minus any other consideration received. The value of the life estate is determined in accordance with Section 2605.25.10.05. Example: The applicant, age 66, owned a home valued at $235,000. The applicant transferred the title to the child for $20,000 and retained a life estate. Using the Table in Section 2605.25.10.10, the life estate value is $156,394.85 ($235,000 x .66551). The total compensation received is $176,394.85 ($156,394.85 + $20,000). The uncompensated value is $58,605.15. When an individual purchases a life estate interest in real property in the home of another person, a transfer penalty is imposed, using the full amount of the purchase price, when an individual purchases a life estate interest in another individual’s home and does not reside in that home for at least one full year after the date of the purchase.93 The year of residence in the home begins with the month after the documented purchase and continues for 12 consecutive months. This 12-month period is not a waiting period. The individual must establish and provide documentation of residence in the property and live there for a one-year period. Otherwise, a transfer penalty will be imposed. The penalty cannot be prorated or shortened in any fashion based on fewer months of residence. The start date of the penalty and length of the penalty period is determined the same as described previously for post-11/1/09 transfers. In addition, under the resource eligibility policy, if the purchased life estate is not producing income and is no longer the person’s home, then the life estate interest will have to be offered for sale or rent at FMV as a condition of Medicaid eligibility. Any transfer or otherwise disposal of the life estate must be evaluated as a transfer of property. This provision applies to individuals who purchase a life estate in another individual’s home on and after November 1, 2009.